Bank of America’s bonus payments for dealmakers surged by as much as 50% in 2021 as large investment banks hiked pay in a fierce battle for talent.
The US lender, which announced bonuses for staff on 26 January, increased variable compensation by 40-50% for investment bankers, according to people familiar with the rises.
The increase is in line with Bank of America’s Wall Street rivals, with Goldman Sachs hiking its bonus pool for dealmakers by 50% and JPMorgan increasing it by 40-50% on the previous year.
Banks have moved to reward investment bankers after a brutal year when fees swelled to a record $129bn, according to data provider Dealogic, working hours spiralled and salaries soared in a bid to attract key talent.
Compensation costs within investment banking at Bank of America’s rivals including Goldman Sachs, JPMorgan and Morgan Stanley increased to levels last seen at least a decade ago.
A Bank of America spokesperson declined to comment on the bonus payments.
The increase in bonus payments at Bank of America was coupled with salary rises and special stock awards for staff. Analysts received a second pay rise within 12 months, FN reported, with entry-level salaries increasing to £65,000 in London. Bloomberg reported that the bank has also increased base salaries for managing directors from $400,000 to $500,000 and rolled out other bumps across its ranks.
Bank of America pulled in $5.1bn from dealmaking last year, an increase of 27% and an all-time high. The gain was smaller than some of its Wall Street rivals, but the boom in M&A led to a near 50% gain in fees at Bank of America to $2.1bn.
As well as cash bonuses, Bank of America is paying out $1bn to the majority of its employees in restricted stock — the fifth year the bank has made such payments, which total $3.3bn over that time. Staff who earn up to $500,000 are eligible for the award of between 65 and 600 shares, which vest over four years starting in 2023. At the top end, this could equate to an additional $27,000 in compensation.
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